Federal Cigarette Tax Hike Sought

WASHINGTON -- Looking to boost revenues and make it financially prohibitive for people to continue to smoke, a federal health commission on smoking is recommending that the Bush administration raise federal taxes on cigarettes from 39 cents to $2.39 a pack.

At least half of the $28 billion in new projected revenues would underwrite anti-tobacco efforts such as a national quit line, a major advertising campaign and insurance coverage for federal workers seeking treatment, The Washington Post reported Thursday. The commission said the huge increase could prevent 3 million premature deaths and help 5 million Americans quit smoking within a year.

The proposals, which the 28-member panel unanimously endorsed, reflect a dramatic shift in political winds as the tobacco industry's clout wanes and tobacco-related illnesses climb, several health experts said.

White House spokesman Scott McLellan said that, in general, President Bush "believes in cutting taxes, not increasing taxes."

The average price of a pack of cigarettes in the United States today, including federal and state taxes, is $3.85. Smokers in New York City pay the most -- about $7.50 per pack -- while North Carolinians pay the lowest at $3.15. Congress last approved a tobacco tax increase in 1999, when it raised the federal rate 14 cents over a two-year period.

"There is a lot of science on the impact of cigarette prices on consumption," said Ron Davis, a trustee of the American Medical Association and a member of the panel that wrote the report. "A 10-percent increase in price will lead to a 4 percent decrease in consumption."

Tobacco industry representatives counter that higher taxes would not necessarily reduce smoking or improve Americans' health. "The government pockets over $80 million a day from smokers," said David Howard, a spokesman for R.J. Reynolds Tobacco Co. "The government certainly has all the money it needs if it is interested in addressing smoker issues."

Philip Morris USA spokeswoman Jamie Drogin said state and federal tobacco taxes and payments negotiated in the 1998 national tobacco settlement will generate more than $20 billion in government revenue this year. In many instances, she said, the money is being spent on projects unrelated to tobacco and health. "Balancing a [state] budget based on a declining source of revenue is unsound fiscal policy," she said.

In its report, the Interagency Committee on Smoking and Health documents the toll of tobacco-related illnesses on society. Of the 50 million smokers today, researchers project between 15 million and 25 million will die prematurely; about 100,000 people die of lung cancer each year, the report said. "The excess health care costs of tobacco use are estimated at $75 billion per year" and indirect costs such as lost productivity and fires push the figure to $150 billion annually, according to the report.

Surgeon General Richard Carmona, who is chairing the commission, said he is withholding judgment on the recommendations. "In principle, I recognize the amount of work that went into this," he said. "I haven't studied all the ramifications."

Davis, former chief of the tobacco division at the Center for Disease Control and Prevention, said the U.S. tax on cigarettes as a percentage of retail price is far less than it is in other industrialized nations. "Clearly, raising taxes on tobacco is a good thing from a health standpoint," he said, pointing to high disease rates in America. "The fact that we undertax cigarettes means we have more smoking and more death and disease associated with smoking."

Others voiced skepticism that Republicans would pursue the proposed tax increase because of GOP links to the industry. For years, the tobacco industry has been a reliable source of campaign contributions for the Republican Party. In the recent congressional elections, the industry gave $8.2 million, and 79 percent of those contributions went to Republicans, according to records analyzed by the Center for Responsive Politics. In the 2000 campaign, Bush received $92,000 from tobacco interests and the Republican Party received $7 million, much of it in the form of now-illegal soft money, according to The Post.